The Leave Campaign’s relentless focus on immigration has seen a rise in hate crime and been acclaimed by Far Right groups across the EU.
Members of the victorious Leave Campaign in June 23’s referendum on EU membership (Brexit) claimed to have noble ambitions for the UK. They wanted to “take back sovereignty” and “democratic control”.
Maritime links and commercial interests are bringing India and Australia closer, opening opportunities for the two nations to address the clear danger of climate change in the Pacific through trilateral aid partnerships.
There have been two developments that are shaping investment climate. The first was the dramatic rally in equity markets last week, with many recovering nearly all that was lost on the Brexit wobble. The second was clear indications that the UK will not begin the formal divorce proceedings in the coming months.
That had seemed likely when Cameron said he would leave it to his successor. However, the leading Tory candidates are suggesting that Article 50 will not be invoked this year.
The US dollar turned in a mixed performance in the week after the UK decision to leave the EU. There was an acute market reaction for a couple of days, but the disruption to the financial system was not major.
Officials and investors feared worse. The initial line of defense, central bank swap lines were barely used. The Bank of Japan was the only central bank to draw on the Fed’s lines, and even then, the amount was inconsequential ($2 million).
Investors are debating over whether the Bank of England ease policy at the July 14 MPC meeting or wait until August Quarterly Inflation Report when new post-Brexit forecasts will be ready. There are many dimensions to monetary policy, and the first move could come next week.
Just days after praising the central banks of the world for preventing any notable cash shortfalls, the International Monetary Fund (IMF) has issued a warning that the effects of the United Kingdom’s (UK) decision to sever its relationship with the European Union (EU) will have far-reaching consequences for the world economy.
A spokesperson for the IMF, Gerry Rice, described Brexit as likely to dampen global economic growth in the near term, and advised that the IMF urge policy makers to take decisive action when addressing the situation.
The US dollar is little changed ahead of what will likely be a thin North American session due to the US holiday on Monday. The Australian and New Zealand dollars are attracting flows, ostensibly as a place to park funds, even though tomorrow’s Australian election looks a dead heat.
The global refugee crisis took another twist this year when the European Union struck a deal with Turkey to take refugees that make it to Greece. Turkey is not an EU member, so in exchange the EU promised to reenergise talks on Turkey’s EU membership and accelerate visa liberalisation, making it easier for Turkish nationals to work and travel in the EU.
However, amidst growing claims of human rights violations, there is mounting concern that Turkey does not meet the standards of a ‘safe third country’ for refugees.
The global capital markets have quieted considerably since the start of the week. Month and quarter-end considerations appear to be playing a role. In addition, there is a sense it will take some time to sort things out.
After plummeting 18.6 cents, mostly in a few hours after it became clear that the Brexit would carry the day, sterling has rallied four cents from the low set on Monday. We recognized that the magnitude of the drop left sterling technically over-extended, but we caution against suggestions that the worst is behind us and that a durable low is in place.
This week’s high so far was recorded on Monday around $1.3565. Today’s high has stopped short of this, and beyond it is last week’s close near $1.3680.
